4 Administration and Accounting Requirements

4.1 General

4.1.1 For both reporting and audit purposes, all transactions involving the Fund must be fully documented and a clear audit trail maintained. 

4.1.2 The withdrawals from the Fund must be calculated, in writing, according to procedures in this Guide for the type of scheme.  Details of the calculations and withdrawals must be retained for inspection by external auditors. 

4.1.3 The Fund need not be cash backed, but monies must be available when needed to produce the replacement properties.

4.1.4 RPs may never overdraw from the Fund, not even in anticipation of forthcoming proceeds.

4.1.5 As with SHG, the fund should not be spent in advance of need.

4.1.6 The Fund should not be used retrospectively, for example, to recoup costs previously funded by the RP.
 
4.1.7 The Fund should be operated on a first in first out basis.

4.2 Internal Accounting and Administration

4.2.1 A clear audit trail must be maintained, documenting all transactions involving the fund. To assist this, the TSA suggests opening a separate bank account for the Fund. The account can be cleared to zero nightly with the balance being transferred to the general account for transaction purposes.  This arrangement should allow RPs to produce a statement for the account showing proceeds and expenditure that will help with calculating notional interest. 

4.3 Statutory Accounting Requirements

4.3.1 Section 177(4) of the Housing and Regeneration  Act 2008 makes the presentation of the Fund in the statutory accounts a matter for determination by the TSA.  The TSA has determined that the Fund shall appear as a creditor to be identified separately in a note to the accounts amongst the debts falling due.  The Accounting Requirements for Registered Social Landlords General Determination 2006, was published by the Housing Corporation with circular 01/06 but will be reviewed and replaced in 2010.